We presented detailed studies of the formation of single-walled carbon nanotubes by an aerosol method based on the introduction of pre-formed catalyst particles into conditions leading to carbon nanotube synthesis. Carbon monoxide and iron nanoparticles were used as a carbon source and a catalyst, respectively. The vital role of etching agents such as CO2 and H2O in CNT formation was demonstrated on the basis of on-line Fourier-transform infrared spectroscopy measurements. Hydrogen was shown to participate in the reaction of carbon release and to prevent the oxidation of the catalyst particles and the hot wire. The addition of H2 and small amounts of CO2 and H2O led to an increase in the carbon nanotube lengths. The catalyst particle evaporation process inside the reactor was found to become significant at temperatures higher than 1100 degrees C. The carbon nanotube growth was found to occur at a temperature of around 900 degrees C in the heating section of the reactor by in situ sampling and the growth rate was calculated to exceed 1.1 microm/s. A detailed analysis of possible processes during carbon nanotube formation revealed heptagon transformation as a limiting stage. A mechanism for carbon nanotube formation was proposed.